It's been nearly a year since Tesla showed off its hugely hyped 90-second battery swap for the Model S. Elon Musk said on stage that the first station would be operational by the end of year. Six months later, nothing. Then we heard that it was happening in the first quarter of 2014. Still nothing. So where the hell is it and why is Tesla stalling?
The short answer: it's coming. But nearly a year and a half later, and that's not even guaranteed.
The last time anything came out about Tesla's plans was in February when Musk was speaking at the California Public Utility Commission's Thought Leaders program. "We're a little late on [battery swapping] because we got preoccupied with a few other issues," Musk said. "But we're hopefully going to get that enabled in the next few months between LA and San Francisco."
Since then, it's been radio silence.
The reason, we're told, is because Tesla is busy. There's been a massive amount of effort poured into expanding its Supercharger network, crisscrossing across the U.S., and now into Europe and China, with 115 stations worldwide.
"We diverted most of our team and resources to expanding that network as quickly as possible," says Diarmuid O'Connell, Tesla VP Corporate Development. "It was mostly a reprioritization of efforts."
But that "reprioritization" came at a suspicious time.
Four months after Tesla showed how quickly it could swap a battery, the California Air Resources Board said it was going to reevaluate how it hands out Zero Emission Vehicle (ZEV) credits. Specifically, it was going to revise the "fast fueling" incentives that would grant an automaker seven ZEV credits to refuel to 285 miles with full pack in under 15 minutes – about the amount of time it would take to fill up a gas powered car (say, an Audi A8).
The current Model S gets five credits with its ability to charge with a Supercharger. Add in the capabilities of the battery swap, and Tesla gets another two credits per car sold, for a total of seven. Then it sells off those credits to automakers that aren't holding up their end of the Golden State's green-vehicle bargain.
And those credits help Tesla's bottom line, even if it isn't as much as it used to be.
Every quarter Tesla is right on the edge of profitability, but only if you use the method not approved under the Generally Accepted Accounting Principles (non-GAAP), which includes the money collected on leases, not "sold" vehicles.
For a company always skirting the line of profitability, two credits could make a difference.
So when CARB decided to nix the additional credits for "fast fueling" this past April, there was even less incentive for Tesla to roll out its battery swapping scheme. It hasn't even mentioned the system in its recent SEC filings. And even worse, it's likely to be hugely expensive.
When asked about the cost of the swap sites, O'Connell was frank enough, saying, "I want to talk about that even less."
That's not surprising considering the cost of the first Supercharger station was around $300,000, while the stations Tesla built afterwards were about $150,000. And that's just setting up what's essentially a solar canopy and a few plugs. Imagine digging a car-sized hole in the ground, filling it with insanely complex mechanisms, and then ensuring Little Jonny doesn't lose a limb when Mommy is filling up on Starbucks.
But yes, it's still happening.
"I'd like to have something in place by the end of the third quarter," says O'Connell.
That doesn't sound entirely optimistic, with the inference that it could easily bleed into the fourth quarter – almost a year and a half after it was originally announced. And even then, he's hedging.
"We're in the process of developing our first location," says O'Connell. "We still believe that there are some interesting applications for swap and this first site will be a demonstration – a prototype – for one of those utilities."
"Utilities" in this context could be something outside the realm of your average Tesla buyer. In addition to what O'Connell says is a "regular route utility" – a place where consumers, say, between SF and LA could swap out a new pack – there's a chance that this first station could highlight something bigger.
"We've talked about swap in various contexts," says O'Connell, "You can imagine scenarios where a fleet operator is working with swap in a depot system, where vehicles return from and to a particular location regularly."
This fleet scenario isn't unheard of for Tesla, which entered an agreement with Athlon Car Lease in 2012 for 150 Model S sedans to be used in Europe. But fleet sales in the States seems like a pipe dream in the near-term.
It's easy to imagine stacks of Model S sedans lining the curbs of Manhattan to shuttle drunk club goers or picking up passengers through Uber in SF. But Tesla isn't even caught up with its consumer orders. A 100-car deal with a fleet company would put even more strain on Tesla's already overtaxed production line. If consumers are waiting months for their cars right now, how long would it take for a fleet provider to take delivery?
And that points to the larger issue. With both swapping and fleets, Tesla is perpetually locked into one ambitious project after another. It's impressive, sure, but the constant juggling means things get dropped, and the never-ending battery-swapping delays are just further proof that focus is being sacrificed at the altar of ambition.